Japanese Technological Superiority - a Myth?

ByTas Papathanasis and Chris Vasillopulos, Tas Papathanasis is a professor of economics, and Chris Vasillopulos a professor of management, at the School of Business, Central Connecticut State University in New Britain.April 27, 1989

WHY are members of the United States Congress opposing the US-Japanese joint venture to build the FSX fighter plane? There is no doubt the US will transfer $7 billion worth of technology to Japan. Yet, does the technology transfer justify this new form of protectionism?

Japan-bashers say the joint project should be scrapped. First, buying American-made F-16s would be the cost-efficient option for Japan. The purchase of American planes would also help the $55 billion US trade deficit with Japan. Finally, an outright sale instead of a technology transfer would prevent the Japanese from ``stealing'' US technology, and preclude another Toshiba incident.

These arguments, however, are shortsighted. Critics of the FSX project are advocating technological mercantilism.

Pioneers of technological change, including the US, benefit when their technology becomes the world standard - even if they ``give it away.'' It is simply incorrect to analyze technology transfers in monetary terms, because financial returns are seldom the primary consideration. What is most important is the protection of one's technological leadership. In this light, technology transfers benefit the exporters of technology because they forestall the emergence of alternative, and possibly superior, technologies. Competitors are transformed into functional subsidiaries.

We call this process functional integration. It is the emerging dominant strategy in international trade and development. US technology is not just a product for export; it is a tool of economic integration, and therefore of political power. Standardized technologies are major instruments of this political process.

Despite its glittering prosperity, Japan has based its development on American economic models, technology, and marketing expertise. Although few Americans realize it, Japanese management techniques, as exemplified by Toyota, have been based on the theories of W.Edwards Deming. Similarly, as Nintendo has demonstrated, Japanese marketing is based on fairly dated American models.

Finally, Japanese technology depends on American research. Supercomputers, personal computers, the latest superconductors, and bioresearch, the whole spectrum of technological development, carries the ``Made in the USA'' label. The Japanese have structured their economy according to US blueprints, and they have made it an appendix to the US economy.

Many Japanese officials are disturbed by this dependency on the US. They would prefer to develop their own fighter plane. They believe the price they pay for economic prosperity is too high. They do not want to be a functional subsidiary of the US. They know they must become technologically independent, although conventional economic analysis speaks against it.

A truly independent Japan might serve US political interests as well as an economically efficient Japan has served US economic interests. It seems unlikely, however, that critics of the joint FSX venture have this in mind. They seem concerned that the Japanese will build an aviation industry by stealing US technology. Would they prefer it if the US had to ``steal'' technology from Japan? Would the US aviation industry feel more secure if the Japanese developed competing aviation technologies?

Recall the Toshiba incident. It would be better termed the Toshiba Syndrome - the unlicensed transfer of technology and the fears it engenders.

These fears are unfounded. A technologically dominant nation, such as the US, must maintain its standard-setting position. By encouraging competitors to adopt its techniques, it maintains technological leadership.

The FSX joint venture also exemplifies Japanese weakness. Japan is willing to pay the economic price for technological independence. It is willing to develop its own aviation technology. It could, however, only achieve a compromise that in political terms is no compromise at all.